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How will covid hurt the humble rickshaw?

The rickshaw is a quintessential part of everyday Indian life. But in the age of corona and social distancing, people are becoming increasingly worried about using a non-personal mode of transport. This has implications not only for the money the driver can earn today, but also the financing available and purchase intent of the next set of drivers. In today's post, we discuss all that and more.


The impact of lower trips


There are two broad factors that translate into fewer trips for the rickshaw drivers. First, in the aftermath of corona people are less likely to make casual trips. With a lot of folks having the work from home option, trips for work are likely to be significantly lower as well. Both of these factors lower the overall trips folks name. The other dominant factor at play is people preferring a personal mode of transportation - a small car or two-wheeler- is more likely to be used given the comfort and safety folks feel in their own cars.


The impact of this on the rickshawalas are two-fold - firstly their immediate source of revenue is hurt, impacting not only their livelihood but their ability to pay back debt. Secondly, the financing companies, knowing that the ability of drivers to earn is significantly lower, will be extremely hesitant to lend - which would sharply reduce the ability to buy in a segment primarily driven by debt purchases.


How to the driver cope with the issue


Although rickshaw fares are fairly regulated in the country, the number of folks who stick to the meter varies from city to city, with the compliance extremely strong in cities like Bombay, and extremely low in cities like Bengaluru, where drivers quote a price they see fit for the journey.


In the second market, drivers will find it a lot easier to cope, as they can quickly adjust prices based on the demand they are seeing in the previous few days. In the more regulated places however that will become a lot tougher. A rate adjustment is easier said than done however since there would be an adjustment that would need to be made to the meters for this to work, and would be extremely difficult to reverse. What would be a lot easier is having a multiplier in place for the next few months, until business returns to normal.


The path ahead


The next few months will be tough for the industry, especially given that most folks here live from one day to the next. A few state governments have decided to mitigate the situation by giving out a one-time payout to the drivers, but that is unlikely to be a step that can be adopted by the larger states.


A small hike should be acceptable to most customers and should help the drivers navigate a crisis well. Long term the stress on revenues is likely to speed up the journey towards cost efficiency, with CNG and higher mileage rickshaws gaining greater acceptance.

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